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Viasat/Ligado: Don't Count Any Chickens Yet
Davis Hebert, CFA - Head of Telecom/Media, CreditSights
Savannah Buzzeo - Analyst, Telecom/Media, CreditSights
EXECUTIVE SUMMARY
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We (and the market) had written off Ligado as a nothing-burger. Ligado has a 99-year lease of Inmarsat’s North America L-Band spectrum but, despite paying Inmarsat $1.7 billion to date, still has no business to speak of. We (and the market) had largely written off any material future payments from the now-bankrupt spectrum holding company. Inmarsat is currently owed $507 million by Ligado with the next payment due on Jan. 13. While a new business plan using spectrum leased from Inmarsat suggests a potentially positive outcome, Ligado is suing Viasat/Inmarsat for breach of contract and is seeking repayment of what it had already paid, as well as additional monetary damages (perhaps as a ploy to reduce the obligation). We also believe the bankruptcy could take quite some time to play out (with Inmarsat not being compensated during that time).
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AST deal (and Trump election?) offers a new chance for Ligado. Considering the market had ascribed zero value to any future compensation from Ligado, Inmarsat bonds bounced higher after Ligado filed a prepackaged Ch. 11 bankruptcy, with emergence contingent on new investment from AST SpaceMobile, a D2D satellite provider with ties to AT&T and Verizon. That investment is contingent on regulatory approval of the plan, which has a better chance with satellites versus high-powered terrestrial use (GPS interference concerns), not to mention under a Trump administration that had previously cleared Ligado to launch a 5G network.
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